New Delhi, Oct. 26 -- Clearing a pending personal loan can bring a borrower much-needed financial relief. However, repaying the loan does not always lead to an immediate improvement in the credit score.

Closing a loan reduces overall debt and eases the stress of owing money, but its impact on a credit profile depends on several factors, including how quickly credit bureaus update their records, repayment history and overall credit utilisation. Understanding these basics can help borrowers manage their credit profiles better and build a stronger financial record over time.

Loan closures are not reflected in credit reports instantly. Lenders generally share account updates with credit bureaus periodically, so borrowers may have to wait se...